tv Squawk Box CNBC February 10, 2010 6:00am-9:00am EST
good morning, everybody. greece is the word. the global markets waiting for an announcement on a bailout for the debt-strapped country. on exit strategy, ben bernanke unveiling his plan for the fed's next move. and the house of mouse, disney posting strong quarterly results and investors are responding. a cnbc exclusive with ceo bob ieger, "squawk box" begins right now.
>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick. joe and carl are out today. steve liesman is spending the week on set with me and this morning we are joined by "fortune" magazine editor andy soerwer. >> good to be here. >> meantime, wall street is bracing for a winter storm this morning as the second snowstorm in a week descend eds on new york. washington, philadelphia, they are expected to be hit and hit hard. the federal government in washington is closed for a third straight day at an estimated cost of $100 million in lust productivity. government offices in boston, baltimore and philadelphia all announcing that they will be closed. congress, by the way, is
canceling votes and rescheduling hearings. the united nations headquarters in new york city shutting down schools all through these areas are keeping students at home across much of this region. in a rare move, even the new york city public school system said jobs would shut down. that announcement came from mayor bloomberg a day ahead of the storm approaching. the airlines, they've canceled flights so that planes are not stranded in the snow across the country. the storm is even delaying the release of economic data that was due to be coming out today. the international trade report for december, that will be released on time at 8:30 eastern time this morning. but the treasury department says that the monthly budget statement for january, that's delayed until friday at the earliest. again, you're talking about three days of closures for washington. now, the energy department, they're postponing today's release until friday, as well. the commerce department was due
to release january seams tomorrow. that's been pushed back, too. that will likely be released on friday with all of these numbers. and -- more cancellations of the wilmington schools, ben bernanke, he was scheduled to spend the day on capitol hill until the storm canceled the hearing. but his prepared testimony will be released, coming out at 10:00 a.m. this morning. bernanke is still seeing reiterating the plan to stay on its current course. here is what we're going to do when we're going to do jobs. but don't take anything i'm going to say as any hint of what i'm doing now. >> hurry up and wait. >> what if the markets continue to climb as the government shuts down? >> you can't measure government
productivity, right? i know becky -- you know. >> yeah, that's the cost of $1 hurn million. >> you can't measure government productivi productivity. >> it's an oxymoron. >> i don't mean jobs cynically. i mean because government output cannot be measured, there's no way to measure what output per hour is. >> major rally yesterday on wall street. things worrying back -- no correlation. >> no correlation, no. but i will say, productivity around here, not suffering at all. >> i got up 45 minutes early and the result was i got in 45 minutes early. >> it's not bad out there right now. >> it's a little warmer than they anticipated, at least here in the new york metropolitan area. >> we're we're all ready for jobs, though. i brought a shovel in the back of the car. >> i want to see that. >> you know i'm a weather geek, right? i was looking at the offshore buoy data. jobs has the pressure, right? this thing is as allow -- we'll
talk to these weather guys later. it's as low as a hurricane. the low 2934 is what i saw off the jersey shore or desert coast right now. this thing is bombing out. it's going to be a good one. >> you like that. aye that's news we can use. meantime, greece has been back in the market. yesterday, german coalition forces said the governments have agreed to help greece. but then a german government spokesperson cautioned that a decision had not yet been reached. speculation is swirling that a package for greece will be unveiled. meantime, the civil service strike grounded flights and shut down services across greece today. the labor unions are protesting sweeping government spending cuts that will freeze salaries and new hiring. we've been keeping an eye on the euro through all of this. jobs strengthened yesterday as
this news was starting to get out and circulate. but guys, the real question has to be, is this good news or bad news? does it come with a heavy handed ultimatum from the eu that greece will have to cut back on the spending? is it something that increases moral hazard if it doesn't come with some heavy handedness? >> well, they were talking about it being a balancing act. they have to take tough medicine. government spending has been out of control. government spending is a percentage of gdp. as you know, steve, in greece it's way high. they're going to have to cut back on spending. >> here is the question i have, becky, is whether or not if this progression of sovereign debt follows the same progression as bear stearns. so that greece end up being one of the small ones, they go in and they bail jobs out. it's an easy bailout. you can find somebody to do jobs. in this case, germany plays the role of jpmorgan. they come in and the eu comes in guarantees the -- >> who plays the role of bank of
america? >> that's later on, right? so in bear stearns, there is no bank of america. but it's six months later. and one of the things we talk about with paulson is between bear and lehman, what happened? if they let bear know, did that put others on notice? if they let greece go, does it put others on notice or do you create a moral hazard? >> and i just want to read people the headlines that have come across. jobs was on yesterday, then jobs was off and i think the market felt definitive about it when the journal said it's on. so here is one. german government is an intense international domestic talks. 603.5, aid for greece could be provided laterally. so this thick is developing as we're speaking. >> and they're trying to solve the problem by jaw boning.
talk about a bailout, right, which is sort of stabilize the markets, not only in europe but in the united states and globally. if you can do that, that costs absolutely nothing. but that's only so far that can go, obviously. >> the plan in place brings the debt down to 8.7% gdp, which is not that great in and of itself. >> we talk about our problems here, and nothing compared to those various -- >> somebody asked, maybe it's kotok that we have later, if florida had gone over the deep end and paid all this money out, would vermont and california agree to bail out florida? >> probably. the federal government will end up doing those things, right? >> hold on a second. we haven't had that situation, have we? >> it's not a default. the state level, that will be a whole other level.
>> so far, we haven't had a -- >> i guess the threat was new york babb in the 70s, right? >> drop debt. and that was jobs, ford said no. and i remember because my mother was a new york city public school teacher for 30 years. the teachers came in and gave a huge conseg to the city. >> and fooil felix rowaton saved mac, who is back again, right? >> exactly. >> dubai asks for a ded debt freeze. in late november, dubai world's plan had asked delay on repaying $26 billion in debt rocked the global markets, as we all will remember. dubai became greece does it become who knows ma what. >> there is a mixed story out of china this morning. the country's exports rising 21% from a year earlier. but when you compare january's number to december, exports dropped more than 16%. go ahead and try to figure out
if that's good news or bad news. market watcherses say jobs gives strength to both sides of the market. but it's important to note that the timing of the country's new year holiday, it's throwing off all those year over year comparisons. >> the chinese new year begins this weekend. >> is it saturday or sunday? >> i'm not sure about that. that's why i said weekend. >> sorry. so the lunar new year beginning this weekend. >> all i know is i have an invitation to my neighbor's house as i do every year and she makes terrific chinese food and we go over. meanwhile, it's predicted the numbers will increase this year. gdp was forecast to rise by 3% this year, not bad, and 3.1% next year, so that's two years of at or above trend growth, becky. >> let's take a look at the
markets this morning. the futures are not pointing in a strong direction one way or the other. remember, though, you had a rally yesterday of 150 points for the dow, pushing jobs back above 10,000. right now, you're talking about those futures up by fair value. the s&p futures up by 2 points above fair value, as well. we've been watching oil prices. the weekly oil data will be delayed until friday. nymex crude up 23 cents to $73798. the 10-year yesterday was up to a lot of pressure. you see the yield at 3.6 3%. and gold prices, which have seen some major swings as we've been watching currency swings, up by just $2.20 today to $1,079.40 an ounce. >> there might be traders out there shaking their head with the willies because they're not getting the data. >> withdraw. >> withdraw. no data. >> they'll figure something out,
i think. maybe they will be some snow days. chicago got the snow yesterday, too. so this is blanketing all the major trading operations. let's get to the overseas markets, though. christine tan is standing by in singapore. maybe she will tell us when the lunar new year begins, is it saturday or sunday? first to steve sedgwick with the latest out of europe. >> good morning, everyone. fascinating listening to your conversation about greece. i was in greece a couple weeks ago. they pointed out that they haven't asked for outside yet help just yet and they believe their austerity plan will work. what i can tell you, it's a three-year plan and they want to get jobs down by almost 10%. analysts are saying to me this has never been done in a major oecd country, let alone a country with as many problems as greece has got. that being said, this is a new
government. jobs came in last october. and it's a government which has approval ratings, depending on which poll you believe in the last couple weeks, between 60% and 70% of the greek population, despite the fact there's a lot of strikes today. but that remains, that's more the merkel, obama and brown put together in terms of approval. european markets are up at the moment on the back of hopes for a greek bailout. now out to christine in asia. >> hey, steve. asian markets are broadly higher, but caution still prevailed as nothing concrete has yet been decided. in japan, the nikkei 225 rose 0.3%. toyota continues to cover on the hopes that share price may now have bottomed. another automaker, honda, fell after saying its plans to recall airbags. the kospi soared to a 10-year high in germany, adding to concerns about recovery might be losing momentum.
all eyes on the central bank meeting tomorrow. and the other story we're watching is in china where the country reported strong export and inport figures for january. that helped to give the shanghai stock market up a lift. becky, i'll send jobs back to you. you asked me about chinese new year. i can tell you jobs starts on sunday. monday is the second day and the celebrations go on for 15 days and it's the year of the tiger. >> excellent! we like that, christine. thank you very much. >> how does the stock market do in the year of the tiger? >> yeah. >> roaring, i guess. >> good answer. >> well done, christine! thank you. >> thank you. >> and we'll see you back here tomorrow. right now, let's get on to the u.s. trading day ahead. joining us at this point is john sylvia and paul schatz. and john, can i ask you about the chinese numbers? i know it's not what you normally pay attention to.
but we just talked about these chinese numbers that are bazaar and off the charts. do you have any thoughts on that? >> i think that's consistent with the trade numbers we'll see this morning where u.s. imports are picking up. once again, china noo still see tess major path through exports and that seems to be the way they're going to go going forward. economists like me do have the willies when we don't get the economic numbers, i agrees. >> so what are you going to do this week while you're sitting around waiting for the numbers that come out on friday? >> well, we'll kauch up with our e-mails. >> you have the willies because you can't go fishing. >> that's true. but listen, i wanted to follow up on one thing that you were talking about earlier. actually, in u.s. history, there was an issue about accepting state/government debt. that was alexander hamilton right at the beginning. >> what happened? >> he didn't get jobs. he just said, the nation is going to take over the debts of a lot of states and there was a
lot of opposition to that. >> that was the first debate over the federal reserve, so to speak, in that jobs was the central bank of america, should there be one or shouldn't there be one. >> the first tea party meeting? >> yeah. >> well, the second. >> the second after the actual boston tea party. >> that's right. paul, we've been watching the markets and a big dow pushback yesterday. where do you feel when this comes out? is it one of those things when you think, okay, we're going to get more of a correction, we're due a 10% correction, or do you feel at this point people are going to jump back in anytime people are going to jump back in like that? >> i don't think people will jump back so quickly. we were up 50%, 60%, 70%, depending on which index off the lows. this is a normal, healthy pullback. i do not think the rally is over. on balance, if i had to give odds, worst case, maybe the markets could go down another
1%, 2%, 3%, 4%. but i think the upside is in the neighborhood of 10% or more. so i think you're closer to the end of the decline. maybe it's over. maybe you have another couple of days or a couple of weeks. but i think this is a time where we should get ready for the rally in the end of spring or early summer. >> where is the leadership coming from? are we talking about technology now oregon areas? >> i think this next rally coming is the last rally before we get a much, much bigger decline in the fall and winter of next year. sectorwise, we're struggling right now. almost every sector is rolling over jobs. i think you're going to have some -- we like energy services. we like leisure, roadway, but the real traditional leadership groups, i don't see as being there and that's going be a problem. >> if you like leisure and real estate, you must be pretty convinced that the consumer is back in this thing and is come back with full force? >> becky, i think it's all
temporary. i think this is a trading play, not investing play, and i'm absolutely not convinced. i think the consumer has a short runway here into the summer and fall. then i think there's much harder times. we cannot keep living on this public and government bailout money. it's never worked in history. i don't believe it's going to work now. >> john, is that right? it's never worked in history? >> i would respectfully disagree. the fiscal stimulus, jobs does work in the very short run to help things get going. and i think earlier, steve, your comment about the 3% blue chip survey does suggest that there is sustainable economic growth going forward. now, not as fast as a traditional economic recovery because housing and consumer durable spending is probably not going to kick in. but we did have, i think, sustainable economic growth policy works. and i think once again in the short run, yes. the in the long run, the real
issue is, like greece, as you were talking about earlier, can we pull away and get some fiscal discipline in the economy. >> john, real quick, what are we going to hear from bernanke today that we don't already know? >> i think there's nothing that we don't already know. i think it's interest rates, interest on excess reserves. >> which we already know. we've talked about that being the new fed funds rate and baifkly what the fed is going sosa plant at the forereserves. >> i think it's too difficult for the surprise the market right now. >> john, paul, gentlemen, that you can very much for talking to us. >> george and ringo, where are they? strong returns from its cable division and cost cuts at the film studio driving results for disney, but the theme park remains weak.
reservations are down 10% from last year. our media correspondent julia boorstin sat down with bob ieger last night. i made a chart on this year over year, recreation all over. they're reporting huge discounts. so it's a good time to go, if you can afford to go. if you're exactly sound enough to go on a nice vacation, the prices at those parks are all down. >> and you have to manage these costs. you talk about bob iger, he's will this finger in the eye. you have to do that. >> we'll have more from that coming from julia bores tip. in the meantime, honda is sxaning its recall by another 440,000 cars. this is japan's largest
automaker. guys, there's another story this morning we haven't mentioned yet, but in the wall street journal today, the headline, it's on the front page, it's secretive culture led toyota astray? this is a story you have to read if you haven't read jobs yet. jobs lays out to honda blaming the floor pedals on the mats. apparently they had known for over a year that there was a defect in the gas pedals. >> this stuff between toyota and honda and these quality problems and safety problems, i mean, who would have ever imagined this? and the guys in detroit must be sitting there going, this is actually -- >> we're going to be speaking with someone from gm later today about that. >> and who would have imagined this? toyota is the subject of all the harvard business review about the way we should be running our corporations. >> not just automakers.
>> everybody should run and model toyota and everybody talks about the toyota model. comes now the wall street journal says there is an issue of secrecy. >> and they were lying to regulators and withholding information. the complaints rolled in through 2005 been 2006. >> and before that, though, i think jobs was last week in the "new york times" when they talked about one of the problems toyota had was the desire to beat gm in terms of market share and that's what drove them rather than serving customer webs again, not what you would expect the from this company at all. >> it's shocking considering this is a company that has been known for strong performance, for where safety is concerned. >> it's even stronger than that in my mind in the sense that toyota was a company that could do no wrong. they were suppressing jobs and keeping jobs quiet. you're right, the issue about market share, they were so driven on that. and every week, every month, toyota, more market share, more
market share. you would shake your head. >> and they were driving jobs, trying to beat gm, trying to get to be number one. and maybe they were doing jobs at a huge cost. >> right. anyway, they'll have more on this story coming up later. phil lebeau is going to join us with a gm executive later this morning, as well. >> still ahead, as well, what could be better? the exiting new data that has to do with diesels and trucks, it's kind of interesting. >>
welcome back, everybody. take a look. the futures are a little stronger this morning, up by about 16, 17 points right now when you're looking at those dow futures. remember, this is coming after a 150 pint rally to push the dow average back above 10,000. in the headlines this morning, there's a new index that measures the health of the u.s. economy. it's coming out today and it's called the pulse of commerce index. >> another index. >> pulse of commerce index.
the idea here is to create a picture of manufacturing and retail traffic that will tell you not only about where things are moving, but how much stuff is moving. now, this index has data that goes back to 19999. so it's one that has a little bit of legs with it, too. the reading coming out today says the index falls last month showing economic activity flows. >> and jobs breaks you down into six different regions. >> united states kind of like the train carload. >> there's boxcar loads, other trucking data. i'm not sure how jobs improves jobs, although jobs might be more realtime, which could be something that's useful. >> uxd get data back faster. data back, process jobs and
boom, it's out. the east coast braces for a major winter storm. jeff morrow is joining us from the weather channel. jeff, this is going to put quite a cramp on people trying to get into work today. >> absolutely, up and down teeft coast, we're talking about a new index. the weather misery index. the last week has been nasty, to say the least. this is like the double dose here. the double whammy, if you will. wherever you see the orange here, that's not good. those are blizzard warnings. new york city, parts of long island, philly, baltimore, maryland and west virginia. nasty stuff here, folks. and it looks like it's going to take another 24 hours to get this out of the way. the green you're seeing means it is changing to rain in philadelphia. that will hold the rain in there, i think eventually. the cold air will rush in and
we're going to get some pretty significant know here. jobs won't taper off until late into wednesday and thursday. these are the totals we're looking at here, guys. 8 to 12 boston, 8 to 12 new york. both of those cities didn't get in on the last storm. you're going to get in on this one. 8 to 12 more in philadelphia. d.c., a little less than you had with the last storm, but this is adding insult to injury here, folks. if there is a weather misery index, this one is like way at the top of the screen here. i think a lot of folks are getting cabin fever. back to you. >> jeff, thank you very much. we appreciate the misery, but thanks for the honesty. >> coming up, this morning's top stories, plus julia boorstin sits down with bob iger inside the house of mouse. "squawk box" comes right back. national car rental? that's my choice.
good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with steve liesman. joe and carl are off today. but we are joined by "fortune" editorgazine andy serew. we've been talking about greece. also the global markets this morning. investors are awaiting details for the fiscally strapped country. european union leaders will hold a special summit on the european
economy tomorrow and the speculation is swirling that a package for greece will be unveiled at that time. civil service strikes are shutting down areas in greece today. the euro at this hour tweel, the dollar is higher. the euro at this point, 1.3794. i think jobs just broke above 1.37 yesterday when news started getting out there that there might be a deal like this coming out. also in our headlines this morning, disney posting better than expected fist quarter results. strong returns from its cable division and cost cuts will end up driving results here. the theme parks, as you might get from the state of the consumer remain weak. julia boorstin joins us live with her exclusive conversation with bob iger. >> good morning, becky. i spoke to bob iger to
everything from theme parks to "up"'s nomination to the olympics. he wouldn't comment on whether espn is bidding, but he did have plenty to say about the economy. >> the economy, from a number of different perspectives, is having impact on how much people travel and what they spend when they travel. that would be the primary factor. there is still some softness in the advertising marketplace. but advertising is only about 20 mers of our revenue. and while we're experiencing strength now, in general, it's not as strong as jobs was before the economy crashed in the latter part of 20308. >> do you see the consumer coming back in a real way? >> no, not yet. not yet. there's still a lot going on in the marketplace that suggests that the consumer is being impacted by a challenging economy. clearly, jobs is still an issue, job security an issue. consumer confidence basically has reflected that.
housing prices have not bounced back at a significant level or a significant rate. and so we think we're still dealing with and continue to deal with throughout the year a consumer that is buying hard, meaning shopping for real bargains and buying late and waiting for discounts. >> iger had a lot to say. setting a new standard iger supports. >> clearly, as a trend in the direction of stations getting paid cash for retransmission. we feel given the fact that we create value that we have market leading conversations that we should participate in that drent and we have every intention of doing so. >> and so would you be willing to threaten pulling your product from time warner cable the way that newscorp did? >> jobs would be our hope that
we not face the need or the im flent threat of having a signal taken off the air, but we're also engaged in negotiations and, as i said, we're resolute in our desire to get paid an proept appropriate amount of money for the stations that we provide to these multi challenge operators. >> iger's determination to secure abc fees and higher compensation for esp in will mean higher costs for satellite and cable providers. we'll have much more from iger throughout the day. for my entire entry, go to my blog, krn.known.com. >> good morning. >> good morning, andy. >> you talked about espn. that property is one healthy part of disney, isn't jobs? >> it's absolutely heavy. you have that dual revenue stream. the advertising and transition
streams. jobs sound like iger thinks he can get more in terms of the cable subscribing fees. there are a lot of auto advertiseders on espn, but jobs sounds like that is a lot healthier now than jobs was during the absolute depth of the financial crisis. >> andy filled us in our yo nickname from before. >> oh, yeah, jay-bell. >> yeah. >> i don't think she likes jobs. but jobs takes her back, though. >> i don't mind jobs. i can handle jobs. i can take jobs. >> all right. >> julia, thank you very much. we appreciate jobs. we'll see you later this morning, as well. >> good to see you. let's go down to the snowy futures pits. ben lichtenstein, how is greece playing down there? >> well, i think the major topic right now is the uncertainty associated with it. there's a lot of talk about whether we'll see a bailout or
not. the details regarding that. but i think the concern right now is whether a bailout is good or bad. there's so much uncertainty. that's creating a lot of the volatility we've seen recently. so a major concern right now, and that really never fuels prices higher. jobs tends to lead to the energy that we see to the downside. >> and what are traders expecting today from bernanke? is it a trader's event or a nonevent? >> well, as far as i know, the actual meeting has been canceled, but we're going to receive the words. and i think there is a lot of focus right now on the exit strategy. jobs started to become a topic in the markets amongst analysts, as well. so that i think jobs will be tradeable. jobs will have an effect on the market at this point. it's something that we can focus on other than the greece story. there isn't a lot of information coming out economically in terms of data to be released today or tomorrow or friday, as well. i think we're supposed to
receive a delayed or retail number on friday. but in terms of the agenda that we have set ahead for us to data to be released, it's very limited. so the focus again is greece right now and as we mentioned, again, bernanke. >> ben, that's the problem. you guys are going to start making stuff up, right? >> well, i actually -- i think before you start making things up, jobs shifts to what i like to consider a technical-type market at this point. that's where we have right now, really. we have a major level up in the 1080s. that was the main level of support. and then that's the low that we're looking at as the bottom. in my opinion, steve, i think all good lows get tested examine pel probably see the door open. >> ben, i want to get back
quickly to the fed here. where is the market priced and is there anything that bernanke might say today that might bring forward the expectation for when the fed starts to tighten? >> that, again, is just contributing to the uncertainty that we have right now. and that's been a factor for a while right now, a little bit of an enormous amount of speculation in terms of when we're going to see that action start to taig tapes. and it's inevitable that jobs will. i think that's one of the major focuses today we'll be looking for, if we get in it any words about that. they've been extremely elusive about when that's going to happen and unfortunately, jobs contributes to the market's unability to butt its fingers on anything. >> thank you very much.
hey, ask you ask him about the -- did you feel an earthquake about an hour ago? >> no. i heard -- i was actually awake and moving around and getting ready, prepared for this morning. but i didn't feel anything. jobs was 4.3 or something. >> yeah. that's what i'm just hearing. 4.3, i believe that's the -- >> yeah. i think the was buffered by all the snow that we've been receiving, if anything. it's just -- you know, a lot of people are saying jobs sounded like or felt like a snowplow letting loose and start to go rip away at the streets. but i think jobs was mild. >> okay. good to hear what. >> it's the beginning of the 2012 stuff you were talking about, earthquakes, snowstorms, the greeks. california is tumbling into the sea. >> there is a big fault in the middle of the question right? >> yeah. in fact, back in the late 1800s, there were severe earthquakes there that jobs refers to the flow of the mississippi.
welcome back, everybody. first off, we want to give a thanks and a shout out to squawk-apedia. it's the new madrid fault line, apparently. the quakes were back in 1811 and 1812. those were the major zax. this is running along illinois, indiana, kentucky are all a part of this. but back in 1811 and 1812, i guess jobs set off church bills ringing. >> and it made the mississippi flow backwards. >> we had a guy who said at 5:40 in indianapolis, he felt jobs when he woke up. >> right. anyway, right now, it's time for a check on the news outside the world of business. monica novotny here with a roundup of the headlines. >> becky, you've caused a rush on the google site this morning.
new lakes were also formed, by the way, in arkansas. i was googling f that for you, as well. >> what else should we ask out there? >> anything you want to know. we're all here for you. let's start with more on this storm, right? parts of the east coast fating another broadcast of winter weather to the second time in a week in washington, d.c. the federal government has shut down for a third straight day. and the airports are a mess at chicago's o'hare airport. more than 600 flights canceled yesterday. we'll be watching, of course, and waiting to see what happens today. the space shuttle "endeavour" and the international space shuttle connected following a midnight rendezvous. back on either, nasa said checks of the shuttle have revealed no damage from the launch so far. that's good news. and the aliens in avatar may be blue, but movie viewers are feeling green after watching jobs, at least some of them are. the 3-d picture may have led
some to success, but it's leading others to complain of nausea, headaches and other ill effects. i guess people are getting up and walking out of the theaters in some cases because they start to feel so nauseous from the 3d effects. >> i was worried about that myself, actually, watching jobs. because i get car sick. >> man jobs was the earthquake. >> did you see jobs in 3/d, becky? >> i did. >> and you didn't get nauseous? >> yes. and i throw up all the time, so -- >> oh, my. >> people are sitting there with the milk duds and the soda. >> well, there is a scientific ex balloonation about the way our eyes work and binocular disparity. >> there's something to google. >> thanks, monica. >> thanks, guys. coming up, andy shares the
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the most interesting stories that are coming out of this. also he's got a new book out called "starting over: why the last decade was so damn rotten and why the next one will surely be better." and andy, i'm sorry, i want to start out with the book just because it kind of captivates me. this idea why the last decade was so damn rotten. this is based on a cover story you wrote for "time." but you give us a little more hope in this one, why the next decade will be better. >> the story i did for "time" was backyard looking called "the decade from hell." it was pretty easy to see why, started with 9/11, iraq, afghanistan, katrina and all the economic problems throughout the decade culminating in this great recession that we're trying to get ourselves out of here. you know, but you look at a lot of the problems. and i was wondering where all these things random events or were there common denominators? and there were. neglect, really not accepting responsibility, putting things off when you look at the political problems. >> and you're talking about a broad brush across our society.
>> and even katrina. we'll all take care of the levees at some other point. my thesis is we're sort of understanding that we deferred and delayed a lot of these kinds of things. we're accepting more responsibility. you know, having said that, i mean, decades are artificial things, of course, and there's no rule that says things will get better, but i think we're starting to see we have these problems, we need to address them. people have been fairly negative now. usually that means things over the longer term will probably turn positive. there's a little of that as well. >> we like that. the book is out called "starting over." is it out today? >> yeah, it was out last week, actually. >> okay. >> the other thing you bring today is the article about greenspan in the latest issue which i think is really interesting. he's out now kind of defending himself. he's out saying this idea that i caused the bubble is wrong. and it's an interesting profile of the man along with a really good sort of summation of the arguments from john taylor on the one hand who says the fed had it wrong, caused the bubble, and greenspan who says no, it
wasn't. >> yeah, i mean, the point here, steve, if we were calling him maestro back when the economy was running on all cylinders, that was too kind. to say he's just a goat now is probably too strong and i think he'd argue that as well. he did say he was surprised and he's going to go down in history for saying he was surprised at the extent of the financial maelstrom. on the other hand, to say he caused it himself might be overstating it. it's interesting, you mentioned this debate with john taylor, an economist at stanford, a former colleague and friend of greenspan's, now he's his chief opponent, the person who argues that greenspan really is at fault for not understanding the relationship between the fed fund's rate and housing and the housing market and saying that, you know, he needed to understand that these are coupled and greenspan says they're decoupled. >> the issue of the conundrum was overlooked by greenspan's critics. they were raising rates. mortgage rates declined or stayed very low. you bring excellent gifts. a quick break right now.
see that? that's where we from. >> oh. >> you like them? i make them. >> oh. more car trouble for a japanese automaker. honda expanding a recall to fix an air bag problem. and toyota seeking to win back customers. can u.s. automakers take advantage? we'll hear from gm's north american president on the company's plans to grab back market share. blizzardlike conditions. a major snowstorm packing a wallop from washington to wall street. look out below. the second hour of "squawk box" begins right now. ♪ grease is the word ♪ is the word is the word that you heard ♪ ♪ it's got groove ♪ it's got meaning ♪ grease is the time is the place is the motion ♪ good morning, everybody, welcome back to "squawk box" here on cnbc. i'm becky quick along with steve liesman. joe and carl are both off. guess what? we've got heavy hitters in studio with us today.
joining us for the next two hours to share his thoughts is richard bernstein, the ceo of richard bernstein capital management and a cnbc krb contributor and for a full three hours, andy serwer, managing editor of "fortune." thank you to you both for being here. >> thank you. >> plenty of things we'll be diving through. a quick rundown. disney delivering. reaction to the dow component's latest quarterly results. also, the chicago auto show is in full swing. we'll be speaking with the general motors north american president, mark ruse, about the state of the industry and this latest round of recall for toyota and honda car companies. also, snow, snow, snow. if you haven't looked out the window this morning and you're on the east coast, wake up and look out. there's a major snowstorm that's been moving down the coast shutting down the government, moving data to later in the week, postponing congressional hearings. a blizzard warning in effect for new york city. we'll bring you up to speed with the latest conditions. first, the morning's top headlines.
>> wall street bracing for a winter mess as the second big snowstorm in less than a week descends on the east coast, new york, washington and philly are all expected to be hit. the federal government in d.c., as becky said, is closed for a third straight day. they're estimating the cost at $100 million in loss of activity. i have my questions about that number as to whether or not you can even measure government productivity. anyway, government offices in boston, baltimore and philadelphia announcing they will be closed. my kid's school is closed. that was the most important news in my household last night. congress canceling votes and rescheduling hearings. the united nations in new york is also shutting down. schools are keeping students home across much of the region including new york city where some 1.1 million kids are home in a rare move. the new york city public school system said it would shut down. airlines have already canceled flights. planes are not stranded in the snow. the storm is even delaying the release of economic data. the international transport for december comes from the bea released at 8:30 eastern this
morning. the treasury department says the monthly budget statement for january will be delayed until friday at the earliest. the energy department. school closing, postponing today's scheduled release of its weekly report on crude oil and natural gas supplies until friday. the commerce department was due to release january retail sales tomorrow. that has been pushed back likely until friday. i did find out, by the way, bernanke made it to the office on monday. and apparently he brought his own lunch because he knew the cafeteria would be closed. i don't know if he does that every day. i have a note that geithner ordered in all of his people. it was an article by david joseph. he said, i'm having a full schedule today. see you then. >> no snow days at the treasury, right? >> no snow days at treasury. they made some big thing about the work that put americans back to work. so no snow days at treasury. >> no snow days here at "squawk" either. >> all present and accounted for. >> no productivity loss here. disney delivered earnings magic in the first quarter
beating the street's expectations by 9 cents a share. shares have nearly doubled since its march bottom. strength in its cable operations offset flat sales. cnbc's julia boorstin spoke to bob eiger spoke about those results. >> the economy is having an impact on how much people travel and what they spend had they travel. that would be the primary factor. there's still some softness in the advertising marketplace, but advertising is only about 20% of our revenue. and while we're experiencing some strength now, in general the marketplace is not as strong as it was before the economy crashed in the latter part of 2008. >> jason follows disney for oppenheimer and joins us now. those numbers are much stronger than the street was expecting. as we just heard, there are concerns both about advertisers and the consumer. what's your takeaway from these numbers? >> yeah, the numbers were
definitely better. really the up side was driven more by cost management. at the studio they put in a plan related to cost related to marketing, distributing dvds. they did almost three times the amount of profitability at the studio. then at the parks they got benefits such a fuel hedge which offset other costs. really, i would say this was a quarter drich much more by margins and not by top line. >> jason, where does bob iger take disney from here? strategically there's a lot of change in the media business. advertising will probably remain weak for a while. i know they don't have a lot of their business based on advertising, but what is he doing big picture? >> they're in a more unique position than their peers because, as he said in the earlier clip, advertising is a smaller percentage of their revenue. so i think they can afford to experiment such as he talked about potentially doing deals with apple to give them more content. disney at the end of the day is
more of an entertainment company than a media company. espn is about half the profitability. and that's a service that people are willing to show that they pay for. so it will be interesting to see what they can do with that. selling that in more ways. the theme park is 20% of their business. and so really, for them, when you factor in marvel, advertising actually ends up being, you know, really in the low single digits as a percent of their profitability. >> jason, what do you do with the stock here? obviously, they've got their operations under control. but again, you're talking about cost controls, not necessarily stronger business lines, particularly at the theme parks and the film studios. what would you be telling people to do right now? >> in the preview we put out before they reported, we actually encouraged investors to wait until after the report. we felt that they would come in below the street and kind of caulk down the next quarter, kind of a reset. you know they've shifted numerous management positions, new cfo, the prior cfo became head of the parks. the new head of the studio. socouraged people to
wait. we have an outperform rating. this morning we raised our price target to $38. we think they're past the worst. their businesses are mid-cycle. and if the economy continues to improve, albeit slightly, we think they should be able to accelerate earnings growth through the rest of their fiscal year and really into next year. >> $38, that would be 25% increase from where the stock is right now. are you looking over the next 12 months to that? >> 12 to 18 months. >> jason, thank you very much for joining us. we appreciate it. add honda to the list of carmakers in the news. an air bag could injure drivers. that follows the prius and lexus models. joining us now where these automakers are going from here, author of "crash course," paul eningrassia. paul, how surprised have you been by the failings at toyota
on this issue? >> you know, steve, it really falls in the category of shock but not surprised. i mean, i'm shocked that it got this far. and certainly there's a good story in "the wall street journal" today about how they delayed facing up to this gas pedal issue. but, you know, the stories about toyota's quality slipping really started appearing four or five years ago back in 2005/2006. "consumer reports" downgraded quality ratings on the cars about a year and a half ago. so this stuff has been building, but frankly, i didn't know it would get this far. >> are we writing an epitaph for this company in terms of its leadership in the auto world, or is this just a chapter en route to regaining supremacy? >> well, it's a great question. and the answer is probably the latter but you don't know. things are going to get worse for them, steve, before they get better. there's sort of three issues the way i look at it. there's cars, there's confidence and culture. the three "cs," if you will.
they've got to get those cars fixed pronto, and they've begun doing that. the next thing they have to do is restore consumer confidence in their brand. and that's going to take a while. and it's going to depend how quickly they fix the cars. it's going to depend on bad publicity from congressional hearings and lawsuits and that sort of thing. and maybe the most important and trickiest thing is how can they repair a corporate culture that allowed the stuff to happen that would have been unthinkable a decade ago. they have to be very, very tough-minded with themselves about that, steve. >> paul, toyota was not only the envy of the other carmakers but corporate america. there were guys that went around from the harvard business review to almost any other business school that said copy toyota. it's the one to copy. where did it go wrong, in your opinion? >> well, you know, hubris is one of those human attribute. it's a human attribute. and really, about a decade ago,
toyota set a goal of becoming the number one car company in the world in terms of sales volume, passing general motors which they actually did last year. i think it's a title probably no one should aspire to with the history of that title. but the -- they really expanded in ways that compromised their quality. you know, for example, they started -- they built new factories with new work forces and put brand-new products in there that they had not built anywhere else in the world in an existing factory. that was always counter to the toyota conservative philosophy. so it really was a hubris issue, frankly. >> i thought some of these were actual design flaws, though, when it comes to problems with the gas pedal. that goes right at the very heart of their culture, right? >> well, that's right. and, of course, you know, it's design, but it's all sort of a seamless process. their design production and the expansion of new models. the rapid expansion into suvs after they initially missed the boom in the suv market back in
the mid-'90s, becky. that's one of the things that they wish to catch up on. and that's put a lot of stress on the engineering system. >> wall, i think everybody's focused on the down side for toyota and i think most americans would say, well, ford and maybe gm will gain market share. one group nobody's talking about is the korean auto manufacturers who i think have good quality ratings. what does this mean for them, and will they gain market share? >> yeah, i think hyundai and kia which is part of hyundai will be one of the beneficiaries here. the beneficiaries, the chief, will probably be ford, honda, hyundai and general motors. >> in that order, paul? paul, in that order? >> yeah, probably. >> gm is the last? >> yeah, probably in that order. >> gm is the last one? >> i think they just have -- yeah, they have some management issues to work out there. you know, they have to get their operations together. so yeah, i think it's probably in that order. >> hey, paul, just quickly, so how does gm and ford, how would they play this? is there anything they can do? do they just sit on the
sidelines and watch toyota smolder? >> well, i think they can be aggressive in their marketing efforts. what they're doing is giving special incentives to toyota buyers to trade in their cars. i'm not sure. you know. yeah. it's a little bit of, you know, maybe a too aggressive tank to it. but look, all's fair in love and business, i guess. >> paul, when it comes to the prius, is there another car that's competitive with it? >> well, there's cars that are like it, but basically the prius is far and away the gas electric hybrid leader. it really owns that whole thing. i guess the closest thing is the ford fusion which is also basically based on prius technology. the fusion hybrid. there's various flavors, but there is a hybrid flavor, too. >> and toyota's been a leader in terms of hybrid technology. does this delay future advancement? >> well, it's hard to say what they're going to be doing in
terms of future product plan. it will probably slow some of their development a little bit. i think they're probably going to be more careful on their ps and qs on engineering. but, you know, this whole -- getting leadership in hybrid technology is imperative to the future. and continuing to have that leadership could be one of the keys for their corporate turnaround, if you will. you know, when i was mentioning about hyundai, they have -- they were a quality disaster a decade ago, as was ford, by the way. and both those companies have turned it around. so toyota could come back from this, but it's going to suffer damage in the meantime. >> paul, thank you very much for joining us this morning. >> yeah, good to be with you. >> all right. if you have any comments or questions about anything we've been talking about here this morning, go ahead and e-mail us at firstname.lastname@example.org. up next, the dow creeping back above 10,000. optimism that help is on the way for greece and its heavy debt burden boosting things arnold the globe. later, general motors' north american president live from the chicago auto show on whether
toyota's troubles are a new opportunity to try and grab market share. stay right here. time now for today's "aflac trivia question." what was the name of the ibm computer that defeated garry kasparov in chess on this day in 1996? this is not more benefits at greater cost to your company insurance. this is not how does it fit in my company's budget insurance. this is help protect and care for your employees at no cost to your company insurance. with aflac, your employees pay only for the coverage they want or need. and, the cost to you - nothing at all. if all you know about us is... aflac! ...then you don't know quack. to find out why more businesses provide aflac, visit getquack.com "s" stands for straightforward. as in up-front, honest... total transparency. straightforward is the way td ameritrade does business. simple, fair pricing. no hidden account fees.
now the answer to today's "aflac trivia question." what was the name of the ibm computer that defeated garry kasparov in chess on this day in 1996? the answer? deep blue. >> aflac. >> welcome back to "squawk box." in just about 30 minutes we make sense was currency -- the global currency market with two pros who have skin in the game. meantime, reports this morning that germany's government is in intense negotiations about possible aid to debt-stricken greece. deteriorating confidence in the ability of greece, portugal and spain, fiscal shortfalls has pushed the euro near nine-month lows. becky. stocks coming off of a rally fueled by hopes of a european union aid package for greece. let's turn right now to our guest host today, richard bernstein, who's the ceo of richard bernstein capital management. also joining us right now on the markets is barbara marson, portfolio manager of the gabelli
blue chip value fund. folks, we've been talking about europe and what it all means. a lot of people trying to figure out where the market is headed next, if this is in fair territory or not. and richard, i think you're fairly optimistic when you look at what's been happening with the economy and where we're headed from here. >> i am. not so much the economy, per se. i still think that people are underestimating earnings growth as we go through 2010. i think people forget that leverage is a double-edged sword. and we saw it on the down side. and now i think what we're going to see is the benefits of financial leverage and operating leverage coming up the other side. and the profit cycle is just beginning to trough. the leading indicators of that profit cycle are very, very optimistic. so i think people are underestimating corporate profits growth as we go through 2010. >> barbara, you take a slightly different view. you think that we've actually factored in all of this growth, everything that's going to be out there, it's already benefactored into stock prices, and that's why we've seen the pullback recently, correct? >> yes. well, i think rich was saying that he's not sure that a lot of the profit growth will come from
the economy. and i think we have, over the last year and a half with the bust and now some recovery from the frozen state, you know, recovered to a lower level of activity in the economy. and i think that's priced in here with the multiple and the earnings. you know, individuals are saving more and trying to rebuild wealth somewhat. corporations are looking at that lower spending level. you know, not hiring as much and not spending. i think we're seeing that consistently in the earnings reports. we're mostly through the earnings season. and i think we saw that in the disney report where they did beat on the earnings estimate. and they did have some things that were positive, but consumer spending was down. they noted resort bookings were down. and they did manage to pull in good revenue with price cuts. so i think that rich is certainly making a point where you have seen this in the last couple of quarters where companies have really beat the earnings estimates, but they're doing it through, you know, b better technology. >> barbara, it sounds to me like you guys are almost saying the same thing, which is that you're
pointing out that the gains we've had have been from cost cutting. and richard seems to be saying gains from revenue growth on the top line are still in front of us and may not be priced in. are you saying top line revenue growth from higher consumer spending is already priced into the stock market? >> i think so. i think the recovery from a year ago is priced in here, and i don't think we'll see real pickup for at least another year or two. i don't see the real economy following along now to this recovery which has been led by stimulus spending. i don't see that coming for another year or two. and i think we're seeing that consistently in the outlooks of the company of corporate earnings. >> i think barbara makes very good points. she's a former colleague of mine on tv and all those kind of things. >> this is not the senate, richard. >> my friend from gabelli. >> it's not the same. >> but i think that what people don't realize is that profitability in the united states is more volatile than it has ever been before, by ever been before, i mean going back to the depression and that the
amplitude of the profit cycle we are now booming and busting more than we ever have before. and that's been growing through time. so i think when you look at valuations now, we have to think of the entire u.s. economy as a deep cyclical stock. very often it has a high p.e., you want to buy it because the earnings will rebound. you don't want to do that when the p.e. is 5 because that means there are peak earnings. >> is that vol talt because of the leverage? >> increasing leverage over the last 15 or 20 years, exactly right. >> are there any sectors that do have growth that's organic? >> oh, no. i hope that there's a little organic growth still in the economy, although your skepticism is probably the right thing to say. but i think that, you know, my personal point is that i think the consumer is not the consumer that we have known. but that doesn't mean there can't be a consumer cycle. and i think that is something that people are confusing. they're getting confused between the secular backdrop which i would argue is miserable and not
changing. and the cyclical backdrop which i think is quite good. remember, the stock market price is on the margin. if people start buying more things, not necessarily in absolute terms, but more things, the stock market will react accordingly. >> i know some of the stocks you like are kraft, bristol meyers, dupont, do you agree? >> i think richard's right that profit margins have been strong in the last couple quarters but again it's been achieved by cost cutting. and i don't think you want to put a much higher multiple on that even if we do continue to see good profits over the next year until you start to see top line pickup. and there i don't think we'll see that for another year or two. that's why i think it's good to get companies that have a lot of blue chip companies right now have good dividend yields of 3%, 4%, 5%. i think you can wait out this period which i think will be volatile over the next year without gains that will be lasting. i agree with certainly the profit margin side. i don't think i really want to
put a higher multiple on profits achieved that way until the real economy comes on. and i think i'm waiting for that a little longer than rich, i think, i'm thinking it's coming a little sooner. >> barbara, we appreciate your time. >> thank you. >> rich will be with us for the rest of the program. >> current theme, getting paid to wait. buying the dividend stocks, you get paid to wait. coming up, the latest on the massive winter storm pounding the east coast right now. new york under a blizzard warning. the latest update and how long it will take you to dig out. yeah. would you like a pony ? yeah ! ( cluck, cluck, cluck ) oh, wowww ! that's fun ! you didn't say i could have a real one. well, you didn't ask. even kids know when it's wrong to hold out on somebody. why don't banks ? we're ally, a new bank that alerts you when your money could be working harder and earning more. it's just the right thing to do.
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let's head outside and get a check on the latest winter weather. >> do we have to? >> i don't want to go outside. mike's outside. you go outside. weather channel's mike seidel is in washington, d.c., and he has the latest. mike. >> reporter: hey, steve, you don't have to go outside. we do it for you here at the weather channel. we're here in washington. another dose of snow. but unlike last weekend's storm, 20 to 30 inches, we're thinking 8, 9, 10 more towards baltimore, northeast maryland, new york city, a total of 12 to 18 ifshlgs. plus the wind will really ramp up this afternoon. this storm is going to go through what we call a genesis off the east coast, become a
bona fide nor'easter and those winds will howl. wind gusts of 45 to 50 miles per hour. that's why the blizzard warning. blowing and drifting snow. you see how it's piling up. last night when i got in, it's hard to find any surface where you can see the asphalt. and they're going to be piling it up again. the other problem has been the salt. we got good news yesterday that nine barges are on their way into the port of baltimore. that's where a lot of trucks here. the wait is up to eight to ten hours. 40,000 tons offloaded yesterday. here in d.c. they'll be okay, but some municipalities in the area are beginning to ration salt as the storm winds down, the wind will continue. the rest of the week will be sunny and cold. but steve, there is no indication now in the pipeline of a next storm. with confidence. back to you. >> i thought sunday, monday something was coming. >> reporter: well, you guys up there have the early line. i'll have to go check my weather
maps. >> do la, la, la, la, la bamba. mark royce joins us for his first interview since he was given the position. he'll tell us whether toyota's troubles represent a new opportunity for general motors to grab market share. and then debt concerns around the globe has currency traders on edge. we navigate the choppy waters in just a bit. they've served for decades as a golden, tasty sidekick... to the all-american meal.
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welcome back to "squawk box," everyone. still to come this morning, we have gm's north american president, mark reuss in his first tv interview since being assigned the job. also in 15 minutes, how the currency markets aregrowing con. and in the next hour, metals and mining with the ceo of bhp bi billiton. first, what is making headlines this morning and steve has that. >> ben bernanke did have a date with the house financial services committee today, but it's been canceled due to the
snowstorm. how far, the fed chairman's planned testimony will still be released at 10:00 eastern time. he'll address the fed's plans to eventually exit from its extraordinary monetary policy issues -- or measures. mortgage applications fell 1.2% last week. that was primary due to a drop in applications for new mortgages. and the faa may be about to assess american airlines, one of the largest fines in the agency's history. that's according to the associated press. the faa is wrapping up a probe into safety violations at american involving improperly mounted wiring in the md-80 aircraft that i fly all the time. the world's largest mining company is a stock to watch today. bhp billiton beat forecasts with its first half profits which were 24% than the prior half of the year. it's also making conscious comments about a global economic recovery. the company's chief financial officer will join us at 8:15 eastern. we look forward to that. the chicago auto show is in full swing. not only it's is the buzz going
to be about what could be coming to a dealership near you but what may also be sitting on the showroom floors and lots for months to come. cnbc's phil lebeau is in chicago this morning and joins us with a special guest. >> good morning, becky. we are joined live from the chicago auto show by mark reuss, president of gm north america. he's been in the job, what, six months, i guess now, mark. for you, this is an important show. you guys are unveiling the chevy silverado hd, the hd standing for heavy duty. this is a segment where you guys cannot afford to not keep up with the joneses, so to speak, correct? >> good morning, phil. that's right. the biodiesel and heavy duty that we're introducing here in chicago is very exciting for us here because it will have people still earn their livings and use heavy-duty trucks in a very good way. in the biodiesel piece of this is very good for the environment. and yes, we survived the earthquake and the city looks great and the mccormack center.
it's very exciting. >> for those of you that don't realize out of chicago, we had an earthquake last night. woke me up and probably you, too, mark. give me some perspective in terms of where general motors is right now. you had retail sales, a slight increase in really what was a pretty lackluster month for the entire industry last month. and it brings up the question, are you seeing the trajectory that you need to see as you guys start your recovery in 2010 on the retail side? >> oh, there's a great question, phil. last month here, we had a good january. and we had about a 14% increase here across all of our brands. but more importantly, as we got rid of and shed four of our brands here, our market share actually, we had an increase in our market share. and we had, you know, a 30% increase in our core brand retail experience here for our cars and trucks. so those are very powerful numbers for us. if you look at this, you know, we're right where we need to be here. we got rid of a lot of our old inventory around the four brands
in december and came out of the chute here in january with a pretty strong set of numbers here for us. it's been very good for us. >> mark, what does your research tell you in terms of "a," what kind of business you may be taking away from toyota as it stumbles right now? and "b," the rotation, if there is a rotation, that people are seeing out of toyota into other automakers, whether it's gm or ford or the korean automakers. what does your research tell you in terms of how much you're benefiting percentagewise? >> well, i've got to tell you, we don't have research around that right now, phil, because it's happening sort of as we speak. but i will say that, you know, independent of the turmoil in the industry, for the first time our malibu from chevrolet outsold camry independent of that. you know, we're seeing some people that, you know, are concerned about it, obviously, here. but from a gm standpoint, what we really want to position the company as, you know, we see some people that are in toyotas and have bought them and driving them, they're watching carefully
how general motors and the rest of the industry reacts to this. and i can tell you from a general motors standpoint, we are approaching this with class and honesty and integrity. we don't want to be seen as, you know, not being responsible with what's happening across the industry right now with the topic. so, you know, we're just -- you know, i wasn't raised that way. you know, we are going to treat people and our competitors as we would like to be treated. i'm all for competition, you know, on the battleground of earning our customers and our cars. but anything beyond that, you know, we're just not interested doing that. so we're positioning the company very much with integrity and, you know, may the best car win, you know. that's what our advertising says. so we're very confident with the product lineup we have. for the first time, perhaps, we get some people looking at general motors and our products that maybe haven't looked at us before. we're hoping to have that experience here.
>> mr. reuss, steve liesman. i understand you want to react with class in public, but come on. in the offices of gm, a little champagne corks to finally see these guys who have been beating your pants for so long, come on, there's got to be some champagne going on there, no? >> no. there's no humor or any of that going on in general motors today. we are very concentrated on our customers and our products and making sure that we satisfy our customers. and that really hasn't changed. >> mr. reuss, you're right, no humor, but you look at something like this, gm has been plagued for years about concerns that its quality wasn't as highly rated as toyota's office. and this seems to turn all of that on its head. this has got to be a huge opportunity for you. >> well, you know, again, i'm not going to comment on that, and really may the best car win. we've got some great quality awards you'll see in our advertising here over the next few months that we've earned.
and the customer needs to know about that. and that's what where we're going to focus. >> not to harp on this toyota situation, but a lot of what people said the problem was they were so fixated on market share, trying to overtake you guys. are you guys focused on market share right now or profitability? >> we're interested in profitable market share, how's that? >> you can't have it both ways. well, you can. >> yes, you can. you absolutely can. growing market share profitably is where the company is focused in general motors right now. >> mr. reuss, phil lebeau again. you have your kansas city plant now going with three shifts. and i believe that you're going to be adding a third shift at another plant in the detroit metro area. and it brings up the question of is this the best track for the automakers? i know you guys have shut down plants, that you're going with this third shift because you want to increase production. you don't want to open up another plant. yet most people who look at this historically say your efficiency and your quality both suffer
when you go to three shifts. and so it brings up the question, is that really the wisest move? >> well, i don't know, those are some huge generalizations. and most people, i can't answer that. our data shows that that is not true. in the situations where we've done this. and we've done it in a few plants. and like you say, we've just added a third shift in lansing here with our crossovers, the acadia, traverse and enclave. we're doing that to fill our deepersh deeperships. we're starting the system right now. we've got people from our tennessee plant that we used to make our traverse in coming to lansing to work there. i guess if you interviewed some of those people, they're thrilled to be working there. they're thrilled for the opportunity. we have a pretty good energized work force. you know, i think that's really important. our labor and the people that are working in these plants making our products and making our quality products are very energized. and so, you know, that's very important.
you know, we treat that with utmost respect. >> mark, just one more question on this toyota thing. i understand what you're saying about not wanting to make too much of it in public here. but are there things you guys are doing from a business standpoint to take advantage of the situation? we've heard about discounts for toyota customers who come in. what else might you guys be doing here to take advantage? additional advertising or things along those lines. >> we're not taking advantage of any of that. and, again, you know, our game plan here is to grow profitable market share through our product and telling people about the third-party endorsements and the quality and reliability that are in every one of our products that we sell today. that game plan hasn't changed. and so we're not taking advantage of any of that. and so, you know, i'm just going to -- i sound like a broken record because you're asking me that question. our approach in general motors right now is to earn back the respect through our products and our quality that we have in our products. >> mark, nissan is really
looking like they're getting close to unveiling an electric car pretty soon. where do you guys stand on that issue? >> well, we've got a pretty good electric car we're showing here in kchicago right on the floor f the mccormick center in the volt. it's a range extending electric vehicle. think about it as an electric vehicle that almost has unlimited range based on the generator that's in the back of it that happens to use a little bit of gasoline. you know, that generators is actually, you know, recharging the batteries to run the vehicle. so we've got a great breakthrough we think extended range vehicle coming with the volt. that's here in just a couple months. we just announced our new manufacturing of electric motors here. and then we've also got our brownstown facility that's making our lithium ion batteries here in michigan. a lot of good things happening there. we're on the forefront of that and we're going to keep using that technology and leveraging it across a lot of different
vehicles in gm. >> mark, real quick, before we wrap things up here, your projection for industry sales for the month of february. are we still treading at around that 10.5 to 10.8 level in terms of overall sales and not a whole lot of enthusiasm out there for the consumer? >> you know, i'm not going to give a point -- i guess a point forecast or range because it's really hard for us to know, you know, how the industry is reacting to some of the things that are happening right now. but, you know, right around the 11 area there. if we really see sales coming out of the marketplace because of some of the turmoil, it could run at 10.5. we're seeing that kind of a range. >> mark reuss, president of gm north america joining us live from the chicago auto show which kicks off today, at least the media show, guys. they're going to be unveiling the chevy silverado hd, hd standing for heavy duty. guys, back to you. >> thank you very much. appreciate it. when we return, we're going to get you up to speed on the winter storm that's hitting the northeast.
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welcome back to "squawk box." here's the latest on the winter weather packing a punch in the northeast today. the national weather service issuing a blizzard warning until 6:00 a.m. tomorrow morning for much of new york city and long island. i wonder if the kids will be home again tomorrow. experts now predicting gusts of 35 to 40 miles per hour causing blowing and drifting snow, power outages, of course, are possible. local and state governments in new york and new jersey urging folks to stay off the roads if at all possible. the euro bouncing back against the dollar yesterday. expectations the eu will rescue greece from its debt woes. joining us with the latest, mark chandler, global head of currency strategy at brown brothers. boris, i want to start with you. on the wires here, there's going to be some conversation among ministers, it looks like, late today. does that look like things are progressing towards a greek solution? >> it does look like that way. it looks like there's going to
be probably a bilateral solution between germany and greece. and it's really interesting that germany is the one that came to the forefront to try to rescue greece because i think it's in germany's interest the most to see a stable euro. since they are the largest exporter in the world. they used to be the largest exporter, now china took them over. and for them to have a steady euro is very important. i think it's interesting they're coming to the rescue. >> i see a wire report quoting a barclays research report which says that some $176 billion -- u.s. banks have exposure of some $170 billion to the weak currencies in europe. how much of a concern is what's going on in greece going on right now, how much concern is there for u.s. banks? >> i think there is some concern. i would disagree with boris that the driving force is about the euro. instead i think that what's really going on is i think he's right that greek bond exposure by german banks, if you look at the not so much the u.s. banks but german banks, if you look at spain, portugal, ireland and greece, you're looking at
roughly 500 billion euro exposure by the german banks. many people thought that the private sector debt crisis was going to fuel a sovereign debt crisis. but instead we're seeing the sovereign debt crisis in greece spilling over and potentially triggering a new round of banking crises in europe. >> because the banks hold the debt. so is this all a solution here, boris, work this through for me. is it good for the dollar, bad for the euro ultimately, or is it ultimately going to cause the euro to bounce back? >> well, a lot of it depends on whether you can put out the flames for the time being. they're desperately trying to get ahead of the market for right now. i do think that pretty much a lot of the good news is kind of baked into the pie at this point. the only thing that could happen tomorrow is disappointment. if they don't come up with a concrete solution and an actual real physical rescue of the greek fiscal situation, then i think the euro comes right back down. so i think the risk is to the down side for the most part right now.
>> marc, i know it's hard to take the greek situation and the european situation out of it, but what's your long-term view on the dollar? >> well, you know, i've been pretty bullish on the dollar. i think that i -- i wrote a book last summer, "making sense of the dollar." what i tried to argue was that the market was exaggerating the problems and underestimating the cyclical influences. so i think what this greece situation is showing is a fundamental flaw at the heart of euro which is thought to be by many a replacement for the dollar. what's at stake here in europe is you have monetary union -- or i should say is monetary union sustainable. and i it seems to be quite clear now that the euro is not quite ready to really challenge the dollar. so i think that the consequence for u.s. investors is ultimately, you look at what's happened so far this year, u.s. bond and stock market have outperformed not only the other g-7 members but the drix. py think this year we'll see more americans keep more of their money at home. >> it's rich bernstein. everybody's talking about the dollar with respect to the euro
and what's going on there. but aren't we at the point in the cycle anyhow where the dollar should be appreciating as monetary policy begins to tighten? and what's going on in greece the icing on the cake here for the dollar? >> i'm not sure if when you say that the dollar should be rallying because of the business cycle and the tightening. and i just don't see any federal reserve tightening. in fact, i say quite the opposite. the market had, at the end of last year, been preissing at a june federate hike. and i think now we're looking at something leaner in late q 3 or early q4. the dollar is rallying not so much of good things in the u.s. yet, but because of bad things in europe. >> right, i couldn't agree with marc more on this point. there was an inadvertent comparison in "the new york times" that the exit strategy would be similar to iraq. i think it's similar in the sense that our monetary policy will stay stationary for much longer than the market thinks before we begin to tighten. >> why did the dollar start
appreciating before anybody heard anything about greece, then? >> i think you're wrong about that. i say the greece thing unfolding in early october. i'd say the dollar's rally didn't begin till early december. that was primarily because of position squaring in the end of the year and then later evolved into the greek debt crisis. >> i think people made a political issue out of the dollar and they were wrong. they said this country was going down because of the policies in the white house, and they were selling the dollar because of that. and people were, even on the right-wing radio stations, the anchors there are offering gold to people which, to me, i don't know about you, boris. >> the thing with the gold, my point on gold is that it's a bull market and the bull marketed always have very, very vicious countertrend rallies. i think the structural problems are evident in europe, but they're also very much evident in the u.s. $2 trillion worth of deficit is simply not going to go away. right now we're having very, very good auctions. and as i said, the dollar stays strong until the auctions begin to fail.
we have a failed treasury auction, that's when gold begins to rally. until that point, it's sort of, you know, a range-bound trade. but i do think there's a small but a very real risk for that. when gold does rally, it's going to be a stratosphere. >> is there going to be a treasury auction in the next several months? >> i can't imagine that would ever happen under our current system of the primary dealers system. if anything, foreigners seem to be taking on a bigger share. the last three-year auction earlier this week, over 50% taken in. i think that the far-fetched scenario. >> it is. >> we've had failed european bond auctions already this year. >> that's true. i mean, you know, the failed u.s. treasury auction is a far-fetched scenario but it's a risk to be considered because of the amount that we have to go forward. you know, we always have to consider the black swan scenario. i'm not arguing for something happening now. for now the strength and flow is to the dollar. >> it's like the snowstorm. >> we'll get the next look today.
$25 billion in ten. >> it's like the snowstorm, becky, interesting but scary. thanks, marc and boris. failed treasury auction. coming up, market perspective from our guest host, richard bernstein. and in less than 30 minutes, metal mania. no, not heavy metal music. no, no, no. we're talking about bhp billiton. the cfo will talk about the company's earnings and outlook for metal and mining industry. stick around.
finding the exit. >> more! >> let me out. let me out of here. get me the hell out of here. >> fed chairman ben bernanke ready to roll out the central bank's exit strategy, but will it have investors looking for the door? >> what's the matter, you people? i was joking! don't you know a joke when you hear one? ha, ha, ha, ha! the battle to save greece. >> this is where we fight! this is where they die! >> negotiations to bail out troubled nations rage on. protesters have taken to the streets. and the global markets are waiting for answers. >> one day somebody's going to have to make a stand.
one day somebody's got to say enough. >> it's not wise to keep the gods waiting. >> release the cracking. >> "squawk box" begins right now. ♪ it is a snowy day for much of the new york city area. take a look at this picture. this is from the camera at the top of the rock, rockefeller center. yeah, you can't see a whole lot. and guess what? it's not going to clear up any time soon. have no fear, though, "squawk box" is here and ready for work. we are just 90 minutes away from the opening bell on wall street, and it will ring today despite the nasty weather. welcome back to "squawk box." i'm becky quick with steve liesman. joe and karl are off this week. helping us out, richard bernstein, ceo of bernstein capital management, also a
contributor of ours. and andy serwer, managing editor of "fortune." if you've been watching what's happening in the news, check out the top stories. ben bernanke, the snowstorm up and down the east coast really messing things up. he was scheduled to spend the day on capitol hill until the storm canceled the hearing. his testimony, though, will still be released at 10:00 a.m. eastern time. these are the prepared remarks he was going to make. the fed chairman will talk about the fed's exit strategy. economists are expecting that he'll detail various ways that the central bank may get out of its zero interest rate policy. and you heard the greek music at the top. greece is once again the focus of the global markets this morning. investors are awaiting details of a rescue package for the deb debt-strapped country. german coalition sources said that european governments have agreed at least in principle to help greece out. that gave the markets a boost of confidence. but then a spokesman said a decision had not yet been reached. eu leaders will hold a special
summit tomorrow. speculation is swirling that a package for gross wieece will b unveiled at that time. the dow was up 150 points yesterday, it pushed the dow jones industrial average back above 10,000. this morning the futures have certainly lost a little bit of their exuberance from earlier this morning. right now you're talking about futures just about six points below fair value when looking at the dow futures. we'll keep an eye on it. the opening bell will ring this morning in less than 90 minutes' time. >> and maybe one reason for the weakness is now the wires, becky, are running a headline. a german government official says there's no decision on aid for greece and it's not pending either. i just want to caution people. we've been reading these headlines all morning. one anonymous european official after another. and we have no way of knowing because the wires don't tell us. is this a high-level government official? is this official involved in it or not? they're just running all these out. this is really something i think that's going to rock the market all day long. >> there's also coming out from moody's talking about greece. we talk about these countries,
the pig countries as they're called, portugal, ireland, italy, greece and spain. moody's is saying only greece faces material challenges, that these nations do not share. they mentioned specifically greece, spain and portugal do not share the same credit profile, but they're saying greece is in big trouble and that's the one you need to keep an eye on. >> with the ultimate question as to whether or not they'll be bailed out by either just germany or the european union. let's talk more about this, more of what bernanke might have to say today. let's bring in david greenelaw, morgan stanley chief u.s. fixed-income economist. david, good morning. >> good morning, steve. >> so how are you reading the headlines this morning which i'm sure you're following on greece? >> yeah. you know, as i think there was a quote from a european government official this morning in the journal that kind of said, we have no choice. and indeed i think they do have little choice here. we're going to see some movement towards some sort of bailout type of resolution. it may take a day. it may take a week. but i think we're going to continue to see movement in that direction. >> you're going to discount
these headlines which we read which say there is no -- it's not -- here's another one. government official says it's not germany's job to tell greece what it needs to do. you're going to discount those, ones that suggest there is no bailout. >> well, i think it has implications for the timing and the market is clearly focusing on this. so certainly there is some impact. but i think the end game is pretty clear here. >> all right. david, let's pivot to bernanke. we know a lot about the fed's exit strategy and what they plan to do. what do you expect to hear new today from the fed chairman? >> that's a good question, steve, because there was an article by john hillsenrath on the front page of monday's "journal" that seemed to move the markets and i didn't see anything new. they've outlined the three tools that can be used on the exit strategy, the reverse repos, the term deposit, asset sales. i don't think asset sales are at the top of the list. they're at the bottom. the market is clamoring for some information on the timing of the exit strategy. and that's what the fed is not yet prepared to give them. it's going to be data dependent.
they're still saying it's several months off. i think that's correct. but i don't think we're going to hear anything new from bernanke this morning that changes the view on exit strategy. >> it becomes kind of almost a risk trade. can bernanke talk about exit strategy without tipping his hat as to when it might happen? >> i think that's true. and for some time, i've been thinking that the exit strategy was going to be laid out in sort of a two-stage process. the first stage would be shri shrinking excess reserves or rooerning in the balance sheet, however you want to describe it. i think it means the same thing. the second stage would be raising the fund's rate target. now we're hearing more about perhaps doing that simultaneously and using interest on reserves, changing the rate on interest on reserves rather than perhaps changing the fund's rate target. and i think we could get a little more on that today. but i don't think a final decision has been reached on some of those issues inside the fed. >> david, it's rich bernstein. it's kind of interesting to sit here and listen to the discussion. first we talk about greece which is kind of a liquidity story.
then the fed and their exit strategy which is removing liquidity, the most powerful central bank in the worrell removing liquidity eventually from the market and the markets obviously anticipating that. i know you're not an equity guy, but the equity markets have been in this correction, is this really this kind of juxtapositioning of still liquidity crisis with the most powerful central bank removing liquidity or anticipating liquidity? is that really what's going on here? is this an abnormal thing? >> you know, i think there is certainly some degree of psychological link there. the way the fed sees this liquidity game is it was a very targeted liquidity injunction. it was aimed at bringing down mortgage rates and restoring bank funding costs to reasonable levels. so targeteding something like libor. and on both of those fronts, they've succeeded. but the excess reserves that were created, the extra liquidity that was created is sitting in banks' reserve accounts at the fed. how is that account kbag risky markets? i think it probably is, but the transmission's not clear.
and i think the fed is a little bit uncertain how that transmission works as well. >> david, some of us were talking about inflation sitting around the table here. what's your view? is it really starting to perk up? are we seeing signs? >> i think underlying inflation pressures remain well contained, and we're not going to see any real movement on underlying inflation for quite some time. but the fed has identified three factors that they're looking at in terms of getting the exit under way. those three factors are inflation, inflation expectations and resource utilization. and i think clearly the factor that's going to move them, and we actually expect them to begin to move before the market does, is going to be inflation expectations. i think that's where they're going to have a problem. i think if we get the kind of economic data that we expect over the next few months, and if we get some of these risk aversion events like the greece situation addressed, then inflation expectations are going to move in a meaningful way. i'm not so sure actual inflation will move for quite some time, but i think inflation expectations will begin to move,
and that will be the catalyst for the fed to begin to move towards an exit. >> david, give us a kind of calendar here. first they have to get rid of exceptionally low, and you have a more aggressive fed forecast than the street does. so walk us through the timing of events here. >> we do, steve. and i think that language will begin to change a little bit over the course of the next few meetings. in particular i kind of like the idea that they can maintain the exceptionally low description. but perhaps add an indication that exceptionally low doesn't necessarily mean zero. exceptionally low could mean 50 basis points, could mean 100 basis points. something along those lines to signal that exceptionally low does not necessarily mean zero. and i think perhaps early in the second half of the year we'll begin to see them drain excess reserves and move towards a higher fund's rate target. so maybe sometime august, september. >> so that's the sequence, david, right? first they drain and then they get to raise rates in your opinion? sort of the same thing, isn't it? >> yeah, i was thinking
originally that there was some degree of sequencing there and that there would be a time lag of perhaps a few months in between those two steps. i'm thinking now that they will perhaps occur more simultaneously. >> i think you're right. the way i heard it said is that you would do all three. you would do term deposits, reverse repos and raise the interest rate on reserves which would pull up the fed fund's rate underneath that. >> yeah, i think that's the way most fed officials are looking at it. i have a little bit of a problem with that because i don't think interest on reserves work very well. when it was introduced in the fall of 2008. and it's not even clear to me that it's working right now because the fund's rate is below the target fund's rate. the fed feels this is perhaps just a little bit of a normal spread, that the situation back in the fall of '08 was related to constraints on bank balance sheets. and they weren't able to arbitrage the fed fund's market effectively. they think interest on reserves will work. i think there are still some questions there. >> david, we have to leave it right there.
thanks, david greenelaw from morgan stanley. >> again, some of those comments coming out from moody's this morning, making a distinction between countries like greece, spain and portugal. moody's says those three countries do not share the same credit profile. going on to point out that spain's aaa rating is actually what they call well anchored. they say that portugal could be in a position to look at some sort of a downward pressure in terms of its rating. but, again, saying that spain is very well anchored with its aaa rating. we'll talk a little more later about why greece matters to your investments and give you more on what's been happening with that. but up next, mining for profits. the cfo of bhp billiton. he'll tell us how the mining giant is making it through market swings and the economic recovery. "squawk box" will be right back. ñ
points above fair value, all coming after a day where the dow closed up by 150 points pushing the dow jones industrial average back above 10,000. also shares of disney this morning. the entertainment giant posting better than expected first quarter results. strong returns from its cable division ended up driving results. the ceo bob iger speaking with our julia boorstin. she asked him about perceived weakness in the theme park business. >> we have great products in the marketplace, but we're still discounting to get the volume that we'd like in that business. so no predictions. we're mostly focused on making great product and continuing to pursue the strategies that we've been pursuing for the last number of years. >> shares of disney actually over the last year up more than 59%. you take a look at that chart right there. coming up, a financial storm in greece. and a blast of winter for the northeast. the snow is falling, the federal government is shut down in washingt washington. kids are enjoying a day off from
of this morning. in fact, right now they are below fair value. we'll see what happens with the situation with greece. that's been a concern this morning. there's been some conflicting reports back and forth. grooe a greek minister saying they'll see some sort of solution that comes within the european framework. german officials actually saying nothing's been decided yet. and that's where some of the confusion has come in. in the meantime, bhp billiton out with interim results earlier this morning. joining us now to talk about it is alex vansela, cfo of bhp. sir, thank you very much for joining us this morning. >> my pleasure. >> we saw the numbers were a little better than wall street was expecting. but there's a little bit of pressure on the stock this morning, and some of the wires are reporting it's because of the dividend is not a fatter payout. what would you tell investors who were maybe looking for a slightly fatter payout of the dividend? >> we try to differentiate ourselves from some of the peers in our industry and create a dividend that behaves more like
an annuity. so it's an aggressive dividend policy that we expect where every step forward, not to take a step back. and we have increased our dividend on a compounded annual growth rate by 25% over the last eight years. >> okay. in terms of the numbers and what's been happening with iron ore spot market and the aluminum business, where do you think prices are headed from here? >> it's pretty hard to say other than we expect it to be highly volatile. and if you look at the environment, if you look at the issues we're highlighting not too long ago with sovereign risk and all of that, you expect volatility. so if anything, you expect big increases and big decreases in short periods of time. >> the demand from china when it comes to iron ore has been incredibly strong, correct? >> that is correct. and we have seen a lot of imported products, iron ore and coal into china recently. >> just to follow up on that china question that becky raised, alex, i mean, i was in beijing recently. and it looks a little bit like things are getting overheated
there. are you concerned about that? >> we alluded to that in our look that the monetary policy in china has really performed what it was designed for in terms of keeping the market proof of the global market crisis. but the pace they're doing now is not sustainable. you might look at them, and i think they have made already some calls in terms of tightening up a little bit their monetary policy and bringing growth rates to spectacular levels like 9% but a little bit less than what they were currently which is probably in the low double digits. >> as a dividend-oriented investor, i'd like to go back to the dividend point before. you said you'd like to dividend to progress, but can we take from that that you don't have confidence in your corporate cash flows enough to support a rising dividend? >> no, we have great confidence in our corporate cash flow. and what i'll describe to you is
our cash investment policy. we have three priorities. the first priority is to reinvest in the business. and if you look at our return on capit capital, we're returning 24% on capital. and with capital that's currently not producing because it takes about three years from gold to finish for our product. so we take the nonproducing capital, our return on capital is about 28%. the shareholder gets the biggest bang for the dollar if we reinvest in the business. second, we manage our balance sheet very closely. and we manage to a solid credit rating. if you look at levels, our balance sheet through the many years in cycles, so despite cyclical pressures, despite m&a we have done, despite buybacks we have done about $12.8 billion, we have managed a solid level. and third, we return funds to our shareholders. and this is on a predictable way. that's the policy of the
dividend. almost like an industrial dividend where we average that forward, we don't try to take a step back. and we have done successfully all three. we have invested at a 20% growth rate in our business. we have maintained a solid cite rating, and we have returned increased dividends by about 25% compounded annual growth rate. >> could we go back to china for a second? there have been a couple corporate incidents i'd like your reaction to. four employees of anglo australian mining company were arrested there. there's also the google hacking story that came out where there was some involvement with hacking into google's computers there. how confident are you about doing business with china right now? >> china's our biggest customer. we have been doing business with china for over 100 years. so we are very confident in doing business with them. i cannot comment about the hacking or the issue with the employees because i don't know the details behind that.
but for us, it's been business as usual. i've been to china. i'm going back next month. our ceo has just been there two weeks ago, so there has been no change in how we do business with china. >> thank you for your time. we appreciate it. >> you're very welcome. snow is falling around the new york city area. big news, a snowstorm in february. making it a mess for commuters, many schools are closed across the tri-state area. the weather channel's julie martin joins us from king of prussia, pennsylvania, for an update on the story. jul julie? >> reporter: just outside philly where all schools are also closed today. city offices are shut down. the city virtually shut down as a result of this storm. we're under a blizzard warning through midnight tonight. it is just getting started here. i want to show you the pennsylvania turnpike here behind me. now, this is a thoroughfare that usually sees about 500,000 cars a day. look at that. i counted three. three cars on the road right now. in fact, philly's mayor telling everyone to stay put, stay at
home, stay out of this stuff if you can. in d.c. not too far from me, the third day that the federal government is now shut down. that's about a $350 million loss in productivity. talking about snow removal costs as well. many of these cities have now expelled their snow removal budgets, but they have a lot more on the way. we could be seeing up to two foot here in philly before it's all said and done, guys. back to you. >> thank you very much. when we return, one economic report making it through the snow in washington. we'll get the latest figures on the trade deficit. they'll be released right after this break. and will the financial meltdown in greece leave your portfolio in ruins? we'll talk about why bailing out greece matters to investors right here at home. ♪ at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch.
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how much snow is there in washington? so much snow that this is the shot where we normally see the white house. we don't see the white house. so there's so much snow there, you don't know white house because there's a whiteout with the white house. >> that looks like they stuck a piece of paper in front of it. >> no, it's really a shot. yesterday an extraordinary interview happened with hank paulson. who was doing the questioning? none other than the oracle of omaha, warren buffett.
and among the questions that warren asked hank, these guys are buddies, by the way, billionaire buddies. i don't know if hank's quite a billionaire, but havrwarren ask hank where he's putting his money now that he's out of the treasury and he can make a newport foal yonew portfolio. >> give us an idea of the composition of bonds, stocks, whatever of the portfolio which you've had a chance to establish here in recent months. >> a lot of what i have is in fixed-income markets and money markets and cash because -- but then the others i have tend to be in growth equities because i still believe that the economy can go down and sideways and whatever. but outstanding, well-managed companies and particularly companies that know how to operate globally will prosper over a long period of time. and that's the way you need to
look at investments is over a period of time. >> so he's got a lot of his money in fixed-income in part because he's going to be doing a lot of charity work it sounds like for conservation. but another part is, he's betting on good growth company. not a lot of it, but it's kind of interesting. >> i just thought you always expect the treasury and even a former treasury secretary to say thee believe in a strong dollar. but the idea that he has a lot of his money in cash, too, in cash and bonds, i mean, there's somebody who says he's putting his money where his mouth is. >> you know, i get so much research now from the street as being a bycider all of a sudden. there's no greater consensus right now than you should be buying high-quality, multinational company. and i really think that was the strategy a year and a half ago. but now we have the economy starting to rebound, and we have the dollar appreciating. so why would you look at international companies that the dollar is going to appreciate? >> so you want low-quality local companies. >> exactly right. >> really? >> exactly right. >> i was actually making a joke. okay. >> here's the line we were
talking about before. for more than two years now, small cap u.s. stocks have outperformed emerging market stocks. >> go figure. >> and more to come? >> i think so. i think so. >> all right. guys, we have breaking news on the way. international trade figures for december. that number's about to hit. we've got rick santelli and brian battle of performance trust capital partners standing by in chicago. of course, steve's here in the studio. rich bernstein's here. andy serwer is here. before all that, we're going to continue this discussion. why don't we get the numbers first from rick. and rick, go ahead and take it away right now. >> reporter: your timing is impeccable. too bad the government can't say the same thing. you know, numbers have been running a little late. maybe it's the snow. we are looking for the trade deficit number to come out. we see that the dollar is much more stable today. is anybody picking off this number yet? >> i don't see it, rick. right now we're looking for something in the $34 billion range. >> i'll tell you this. yeah, we're looking for $35 billion to $36 billion
potentially. we have 137 handle on the euro this morning. everybody's debating the size of the bailouts. we have $25 billion in ten-year notes. the only thing we don't have is the trade balance number for you yet. >> weighing down the wires. >> snow in washington. there's so much snow. >> a lot of the data's been postponed. the oil numbers we generally have get have been pushed off till friday. retail sales numbers we're expecting will eventually get released friday now instead of thursday like they were supposed to come out. maybe somebody forgot to tell us that the international trade data. >> well, the trade data guys stuck in the driveway. >> minus $40.2 billion. that is definitely a little more red ink that many anticipated in the aftershock of that in the mark place, well, i'm seeing some selling in treasuries and a little bit of selling in the dow futures. but the dow futures isn't adding up to a lot at this point. so the number is late, but it's also very large. and this may set the stage for all the ongoing debate about the
dollar strong, weak, exports, can we really double them in five years? yeah. i don't know, that's a tall order. anyway, back to you. >> rick, stick around. let's have more discussion. brian battle joining us along with steve, rich and andy who are here in the studio. brian, why don't you tell us a little bit about what's been happening with this push and pull in the futures this morning when you start looking at some of the major stock averages and the futures trades there. we saw them up earlier this morning but pulling back. what's the main driver? >> right. we have a lot of headline risk. there's short, intermediate and long. there's a short-term thing. bernanke's text comes out. intermediate risk, what is the eu going to do about greece? they're having a special meeting. i don't hold out hope this bailout is going to last because george average walking down the street in athens will save anything. it will probably work but probably not long term. really short term, you heard rick say it, the ten-year option, we'll see if somebody shows up. it's a big auction.
and there's a lot of bond risk here. the market will see how the auction goes. that's a really interesting thing here at 1:00. >> you know, rick, you weren't very concerned about the three-year option yesterday, but this is a longer-term security, the ten year's coming up. what are your thoughts? >> reporter: well, i'm not really worried about any of the auctions in the near term, although i think we should worry about how long we're going to have these big of auctions in the future. but i think with talk that something is happening with a bailout for greece or maybe the whole group, portugal, spain ultimate ultimately, that could make potentially the 30-year more dicey, but there's no reason to think that dicey equates to anything other than maybe a "b" instead of an "a" in terms of grading demand. >> getting back to the trade deficit, i'm wondering what this new strong dollar has to do with that. >> it's too early. >> it is too early. >> yeah, it's too early. >> it's too early. i don't really know the details.
sitting here. >> i'm trying to find details now. but there was talk going into this number that higher oil prices were going to fuel this deficit. i will tell you significance among other things will be that it's going to tend to revise downward the fourth quarter gdp. there's an estimate going in. and that estimate, i believe, with the november to december change of $1.7 billion. instead what we're talking about is a change of almost $4 billion. so between the wholesale inventories yesterday, i don't know what else has been in it. but wholesale inventories yesterday and trade today, something is coming off that 5.7% growth rate. i don't know how much. as the day goes by, the economists will start to plug that back into their numbers and figure it out. >> it's going to be kind of interesting. you know, remember, all the fiscal and monetary stimulus has been very sick lickally oriented and oriented at consumption, right, which is the standard political response to get a cycle going. that's going to affect this trade deficit. you know, i kind of make a difference between the cycle and the secular. there's been very little done on
the secular issues of the structural problems in our economy. in other words, getting us away from consumption, more towards savings and investment and production. >> because it's almost counterintuitive. >> yeah, as a politician, you're never going to do that. you're never going to do that. so i think we're kind of in that problem spot right now where the trade deficit may actually get bigger. >> there's an interesting stat. the u.s./china trade deficit declined $18.14 billion from november $20 billion. so that suggests -- and i haven't seen it again -- that the trade deficit, the overshoot here was not in consumer goods which is where you'd see it. it's china. >> i stand corrected. good point. >> i don't want to contradict you there, richard. >> good point. >> as the data comes in. the u.s. gap, $380 billion. this is interesting because it shows the collapse of world trade. and so you kind of take this rising deficit with what richard is saying is the idea that, yeah. you want to correct some of the imbalances out there. on the other hand, you'd like to
see world trade come back from the real depression it's been in. i mean, in terms of -- it really did collapse. you look here, in terms of the gap, that's been one of the bright spots if you can call it that for the u.s. economy was the declining trade deficit. now if it starts to come back, we're back to the imbalances. but it also shows that at least -- >> the good news is -- >> the gears of world trade are working again because one of the things that happened was because of the financial crisis. people couldn't get -- he know we've got to wrap it up, but trade is the first use of international finance. you can go back thousands of years, and it's the trade letter. international trade, we went back to, you know, pre-greek times. speaking of, you know, when it came to trade, trade costs because finance collapsed. if it's coming back, at least guys were getting finance. >> good news there. >> rick, brian, guys, thank you very much. and rick, thank you for your valiant efforts. we appreciate it. see you later. up next, turning a greek tragedy into an opportunity. talks of bailing out greece sparking a rally on wall street.
the storm is still continuing. you see cars making their way through times square right now. but, again, in washington, it's shutting down the federal government for the third day running. it's the first time that's happened since i believe 1995 or 1996 going all that way back. this blizzard is expected to continue through much of the day especially here in new york. so we'll keep an eye on it, affecting everything from washington to wall street. also, we've been keeping an eye on futures this morning which have been under a little pressure. at this point, you know, nothing all that shocking or terrifying. people have been trying to figure out what's been happening with the greece situation. that is certainly been driving things from one direction to the next. we had heard some reports earlier today from greece officials. officials in greece who were saying that there's a solution that will come from within the european framework. that's at least the story we were hearing earlier. then there were other reports from german officials who said nothing has been settled just yet. the expectation going into today was that you would hear something from this european union summit that was coming. but, again, that's been driving things this morning.
and we'll continue to keep an eye on that situation in greece. >> i finally got the trade table here, becky. just came ten minutes late. maybe it's because of the exports were up to 142 from 138. i know it's old news now. >> yeah. we're past it. >> the market doesn't have it. ten minutes late. the market saw a major rally yesterday after it was reported germany may step in to guaranteed loans from troubled greece. joining us, cumberland adviser's chairman and chief investment officer. and in the studio we have, of course, "fortune's" managing editor andy serwer and richard bernstein. david, we'll start with you. you don't trust yesterday's rally at all as far as you can throw it. >> no, i don't, steve. first let me say, great show this morning, getting snowed in gave me a chance to watch all your discussion on "squawk" on bernanke and on greece and it was terrific because you've dissected all the pieces. i think the european union and european central banks have to confront an issue. if they violate the no-bailout
clause, they raise moral hazard enormously. touche doesn't want to do that, the governing council doesn't want to do that. on the other hand, there is a liquidity issue that can evolve in greece because greece has to roll the debt. you've discussed it. and there's a second one. and that is euro deposits could be withdrawn from greek banks and placed in german banks. i have one client who's already done that. if greece is not going to be able to honority de its debt, it back up guarantees of its national banks, and that leads to the banking crisis issue which is unresolved, and therein lies the rooted tension in addition to other banks holding greek debt. this has to play itself out. we fear the moral hazard increase. that would be dangerous. >> david, i want to get to that because, you know, one of the things, as we remember what happened here in this country, is a relatively small bank failed. in this case it was bear stearns.
is greece the bear stearns? and we bail this out, we use all of our weapons, and we don't have the ability, then, if a lehman brothers comes along? >> fantastic question. i would remind that the first failure was countrywide, a primary dealer, which was merged with bank of america. >> right. >> then came bear stearns. and when we let indymac fail, it didn't trigger moral hazard. but when we had the primaries in trouble, lehman did trigger a moral hazard cost. and that's the wrestling match going on among the euro's own members right now. this is a very, very difficult issue. if they stay the course on the no-bailout pledge, they will have respected the creation of the euro and the outlook for europe and the euro is terrific. and this shock becomes a great buying opportunity to buy german companies when the euro is weak. that's the way we see it because we don't think they're going to cave. >> andy, it sounds like david
wants them to -- i mean, let greece fail and that creates a hard-money reputation for the euro. >> i think david's a greek hawk. i think, you know, what we're going to see here probably is a middle ground which is probably the most prudent thing to do. >> no. i disagree. there is no middle ground. either you bail them out or you don't. >> there is restructuring which is middle ground. i think the germans will take the lead. the interesting thing to me, is it going to be bilateral or a euro zone effort? and it's interesting. i mean, the germans have the most at stake. i think they're going to do it. but the greeks need to learn a lesson here. they goosed the economy by spending too much. their gdp grew 100, 200, 300, 400 basis points more than the euro zone. they did that by spending too much. >> david, can you half pregnant when it comes to bailouts here? >> no, you cannot. >> andy serwer says you can. >> i'll tell andy i'm not bearing any gifts here as a hawk. >> you're a hawk. what's the restructure, then,
david? >> governments restructure their debt, none of them ever pay off the debt. they refinance the debt. the question is, how do they go about it? the worst case becomes in argentina which then repudiates it because it has no choice. greece won't do that. they'll restructure the debt. the unions will strike and then they're going to have to take an adjustment. there will be a more austere budget. >> i disagree with that. >> thank you very much. the moral here, becky, is beware of greece's debt. >> you're lucky joe's not here. let's get the story on the eu's plans for greece from the ground. cnbc's reporter is in brussels, and she has the latest from there. hi, karolina. >> reporter: hello, becky. now, about this no-bailout clause that you have been discussing, there is a very easy way that the european leaders can go around this clause and actually do what they want to do if they decide to bail out greece. and that is taking or paying
more attention to 122 in the european treaty that says that where member states are seriously threatened with exceptional circumstances beyond its control, the eu may grant help, under certain conditions, of course. so there is a very quick way that these european leaders can go around this no-bailout clause and actually grant a bailout to greece. but what i'm hearing, hearing in brussels is that they are not rushing to do it right now. there will certainly be a statement. there might be some more clarity on how the european union will come up with a financial aid to greece in the coming weeks or maybe in the coming months. but it's probably -- we are not going to see a bailout package announced tomorrow. what i'm hearing is that it's way too early. they still need time for greece to realize the sort of problem they are in. and as you guys were discussing, to start the reforms. otherwise a bailout right now could just mean that greece would just come back later and
ask for another one in a couple of months' time. but what i'm also hearing here is that some of the members of the parliament are saying that maybe some german state banks could be used to buy some greek bonds and start to stabilize or try to stabilize this market a little bit further. and another idea that is here in brussels is that the countries who offer financial aid not to the greek government but to banks that have an exposure to greece. so that would take away a little bit of the risk in this situation and give the greek government a little bit more time to work on this. >> carolina, i mean, that's actually something that is pretty substantial, if you're hearing that we will not get an announcement of some sort of a bailout package tomorrow, do you get the sense that that is coming from eu officials who are trying to talk down expectations, who are trying to make sure that people are not counting on this coming tomorrow, or is this some sort of negotiation that is continuing to take place, and this is the message they want
greek officials to be getting right now? >> reporter: well, you have to think that this summit tomorrow was not even supposed to talk about greece. of course, now they can't avoid this topic anymore. and this story is developing every minute. right now in 15 minutes' time, the european finance ministers are going to start a teleconference to discuss exclusively the greek problem. so obviously, there will be a strong statement hopefully a strong statement -- enough strong statement to calm down a little bit the markets on this. but here in brussels, what i hear is, well, yes. the markets are very anxious about it, but so what? greece needs to do what they need to do, and it will take time. they won't solve the budget deficit tomorrow or the day after. so we'll have to find a plan that will work not only for this month but for the rest of the year and for the coming two or three years. >> for the love of god, tell them to get it done soon. i can't bear talking about greek debts one more day. carolina, thank you very much.
coming up, secrets of the night. the allen stanford saga a year later. but there are new secrets and new questions surrounding the scandal. who else, scott cohen, will bring us that next. "squawk box" is coming right back. to a well-equipped buick lacrosse. get inside each. and see what you find. if perfection is what you pursue, this just might change your course. meet the new class of world class. the twenty-ten lacrosse, from buick. may the best car win.
it has been one year since one of the most amazing stories from the cries crisis. the scandal is still revealing new secrets and new questions about how it went on for so long. our senior correspondent who interviewed stanford exclusively last year is back with new information and a new cnbc documentary. >> hard to believe it's been a year. we interviewed stanford last april a couple months after the sec moved in in february, 2009. who can forget how defiant he was? >> all i can tell you is that alan stanford has run no ponzi scheme. alan stanford has set out to defraud no one. alan stanford has worked his behind off, my butt off for 25 years to build a credible, real, solid, solvent group of companies. >> reporter: well, it is a much
different a different allen stanford now, held without bail for eight months since his indictment in june in downtown houston. that suits his investors just fine but they're even more angry at regulators. we've learned the sec first got wind of potential problems at stanford in 1999, earlier than previously disclosed. the agency didn't start an investigation until 2005. the self-regulatory arm acknowledges it misread flags going back to 2003 and state regulators in texas, louisiana, and florida did no better. the regulatory lapses add insult to injury for stanford's 28,000 investors including angie shaw of dallas. we met her last year and caught up with her again last week. she, with her husband, that's her son there, they lost $2 million. she now heads the stanford victims coalition. >> it's just not possible that they were that incompetent for 25 years. >> reporter: so if they weren't incompetent what could it be? >> someone along the way made the decision to let it continue
on. >> reporter: did someone let him get by? if they did, why? we'll explore that and a whole lot more in our new documentary "more secrets of the night, the allen stanford scandal" 10:00 eastern time tonight on cnbc. might stanford's political influence help him stay out of trouble for so long? we'll look at that and a lot more. >> thanks. we'll be watching it tonight. when we return we'll be talking about the snow. it may be shutting things down in washington but it will not stop the opening bell on wall street. we'll get final thoughts on the markets from our guest host right after this. first though as we head to break take a look at gold prices this morning. last we checked they had barely budged. right now down by $2.80. $1,074.40 an ounce. in 12 markets, 24 hours a day, all from the same account, and settle in u.s. dollars or the local currency. plus, we'll guide you with international research
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supply of free boxes, plus the shipping guide. act now, and you'll get them all delivered right to your business free of charge. priority mail flat rate boxes only from the postal service. a simpler way to ship. call or go online now to get started. that snow is continuing right now. take a look. that's the bull down on wall street. maybe a little snow slowing those bulls down today. we'll see what happens when the opening bell rings in just over a half hour time. in the meantime let's get final thoughts on the markets from our guest host today. again, "fortune" magazine's managing editor and richard
bernstein who is with bernstein capital management. guys, we've been talking a lot about where the markets are headed, what things happen from here. rich, you've got some interesting calls for a guy who likes dividend stocks. >> right. >> you're saying not right now. >> that's right. if you're looking at longer term dividends are a great way to build wealth. reinvesting your dividends through time is one of the simplest ways to build wealth but there are noints time cyclically where that strategy doesn't work well. my argument is we're at that point right now. when the profit cycle begins to heat up which i believe it is in the process of doing you want cyclicality more than stability and dividends. the research i get from the street is almost overwhelmingly in favor of large cap multinational dividend paying stocks and i think that was the correct strategy about a year, year and a half ago. i don't think it's correct for the next year and a half. >> switching over to greece, just some thoughts on that, and, steve, you might have -- >> let me give you the latest. greece is not counting on